Gov. Pat Quinn Wants to Borrow $2 Billion to Pay Illinois Bills

(Springfield, IL) — Is Gov. Pat Quinn’s latest plan a cash advance from the federal government, or another multi-billion dollar borrowing plan?

Quinn wants to borrow $2 billion in short-term loans to help pay off the state’s backlog of debt, totaling $9 billion to $10 billion. About half will go toward paying Medicaid vendors before the enhanced federal match rate drops to 50 percent on July 1. The other half will go toward settling debts with group insurance providers.

“The (governor) feels strongly that we should not leave hundreds of millions of dollars in enhanced federal Medicaid match on the table and is working with legislators on a plan to restructure approximately a billion dollars immediately to take advantage of the enhanced rate prior to its expiration,” said Quinn spokeswoman Kelly Kraft.

The federal stimulus law, passed during the height of the recession in 2009, provided states with about $80 billion in 2009 and 2010 by increasing the federal government’s Medicaid match rate to nursing homes and hospitals, with the caveat that those providers be paid within 30 days. Illinois is being matched at 59 percent until March 31. Afterward, the rate will drop to 57 percent, and ultimately end at its regular match rate of 50 percent on July 1.
House budget expert Rep. Frank Mautino, D-Spring Valley, said the new emphasis on borrowing for health care is stimulated by the looming deadline to maximize payments. He estimates that the state will earn about $170 million to $175 million net from federally matched funds if payments are made before June 30.

“If we go ahead and do the slower payment cycle, and we don’t forward those bills, then we would get our normal match that we would get beyond the dates of June,” Mautino said.

Although he hasn’t seen the exact details yet, Mautino said he expects short-term borrowing to be included.

“That’s how we’ve normally done this, and it’s usually been in the range of about a billion dollars especially when you get extra money from the feds, like we have for the last three years,” Mautino said.

Quinn has spent months pitching lawmakers on his multi-billion dollar borrowing package. The governor has called for up to $8.75 billion in borrowing as a way to erase Illinois’ backlog of bills, despite the $7 billion expected to be generated this year by the 67-percent personal income tax increase. Quinn has not given up on that borrowing package, but now appears to be focusing on the Medicaid match money.

Before he can get more loans, the governor will have to find some votes.  Borrowing requires a three-fifths supermajority in both chambers to pass, which means Quinn will have to win some Republican support.

Sen. Sue Rezin, R-Morris, said she sees Quinn’s proposal as a way to repackage his original borrowing plan. Instead of having the governor “borrowing here and borrowing there,” she’d rather call on spending cuts to settle debt.

“There is a federal match in Medicaid. In theory that is correct, (but) I think we need to look and ask how long these service providers have been waiting to be paid,” Rezin said.

Although the plan may bring some money to the state, Sen. Dale Righter, R-Mattoon, questioned its economic soundness, saying that future payments towards accrued interest could be directed elsewhere.

“The primary reason why the governor is having so much trouble getting traction on any of his borrowing plans is because he doesn’t sit down and say this is what I want to do, this is what we’re going to use the proceeds for and this is how we’re going to pay it back, and then stick with that,” Righter said.

The Illinois Office of the Comptroller already has begun tripling normal payment amounts to Medicaid in order to benefit from the higher compensation rate. It paid $330 million last week and $320 million this week, said spokesman Brad Hahn.

Despite reservations from Republicans, Quinn said it’s not about “politics and deals.”

“If we don’t apply and get it done by the 30th of June — you can’t wait to the last minute, you got to get it done before then — if we don’t do that, we’re going to lose that money,” Quinn said.

Melissa Leu, Illinois Statehouse News

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